We all know that buying a home is a huge financial decision that requires adequate funds and thorough research. But there’s more to owning a home than just buying it. Beyond what you pay to own the home, be sure you take into account the additional costs that come with being a homeowner.
Moving may seem minor but it’s a cost that often comes very soon after forking over a large sum of money. Once you’ve purchased the home you want to live in, you have to get there. Whether you rent a truck and do the heavy lifting yourself or you have full-service movers take care of the hard work, there will be a cost to move all of your things from your current home into your next home. This is important to remember when you are figuring out how much of a down payment you can afford. You want to make sure you have enough left over to get to that wonderful house once you buy it!
While renters are usually used to paying on a monthly basis, owning a home almost always comes with monthly mortgage payments. This includes the repayment portion of the principal as well as interest. The monthly expense depends on the amount borrowed, interest rate and whether your mortgage is fixed-rate or adjustable-rate. Be sure to do the research and make an agreement with a monthly cost you can afford.
Taxes and Insurance
As a homeowner, you have to pay property taxes and home insurance. The construction materials and location of your home affect the cost of insurance — and insurance can rise over time. You may also need supplemental insurance if you live in an earthquake or flood zone. These expenses are often paid each month, and are often rolled into your monthly mortgage payment.
Utilities and Maintenance
Even when you consider household appliances, furniture and landscaping, basic upkeep can be the most expensive aspect of owning a home. Electricity, water, trash, gas and even more bills come each month — though these vary greatly depending on seasons and lifestyle. Repairing and maintaining the features of a home can add up quickly, depending on home and appliance age. Furniture to fill your home, decorative items for holidays and the everyday, as well as lawn care also add up — especially if you hire professionals.
It’s a good idea to consider these costs when you are deciding whether to buy or rent a home and to have some cash reserve on hand for these costs.
More on Mortgages and Homebuying:
- Why You Should Check Your Credit Before Buying a Home
- How to Find & Choose a Mortgage Lender
- How to Search for Your Next Home
Image: David Sacks